What the NBA Knows About China That Silicon Valley Doesn't

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What the NBA Knows About China That Silicon Valley Doesn't

Yao Ming at Tian'anmen Square in Beijing, China on March 3, 2016.

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In 2002, one of China’s largest beer manufacturers came to Houston.

The Houston Rockets had recently drafted Yao Ming, the 7-foot-5-inch Chinese center, to play for the team. As the year's first overall NBA draft pick, Rockets owner Les Alexander predicted that Yao would be “bigger than Michael Jordan.”

And Yanjing Beer was looking for a big crowd. So the Chinese company signed a multi-million, multi-year deal with the Rockets to become the first official international beer partner of an NBA team. It was simple: Yanjing would showcase its logo on signs around the court and arena. Viewers far beyond Houston—and the US itself—would see those ads.

The Yanjing deal was just one of many to showcase the NBA's unique global influence. Over the past three decades, the league has expanded its reach from Paris to Mexico City to Tokyo. But the NBA's crowning achievement as an exporter—one that puts it in the same prestigious echelon as Apple and Disney—is its success in the most populous country in the world: China.

Now, as China hustles down the path toward becoming the world's largest movie market, among other consumer superlatives, US media companies are looking to gain traction. And they can look to the NBA as a positive precedent.

But China is a complicated place that has stymied the likes of Google, Facebook, and Netflix. The NBA has worked since the 1980s to build a fanatic fanbase in China. And it started with a strategy that some of the world's biggest, most successful tech companies have come to embrace in the decades since: it gave away its product for free.

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Stern in China

When David Stern became the commissioner of the NBA in 1984, he started looking overseas. He set up NBA offices in Paris and Tokyo. Then he set his eyes on China. “Like many major American franchises, they felt they had saturated the American market,” says David Lawrence Andrews, a professor at the University of Maryland who has written about the globalization of sports. “But they did it earlier and more effectively than any other league.”

The NBA was not the first group to introduce basketball in China. Missionaries affiliated with the YMCA brought the sport there way back in 1895. Over the next century, basketball grew to become one of the country's most popular sports to watch or play. It also became a kind of pawn in Sino-American diplomacy. In the 1970s, US basketball players went to China to play and train Chinese teams.

So when Stern went to China in 1987, the market was already seeded. In Beijing, he met with government-run China Central Television, the country's dominant television network and agreed to give away recorded telecasts of NBA games for free. Two years later, the NBA licensed live games to CCTV.

“The NBA was one of the first American media companies that was able to start broadcasting on Chinese television,” says Aynne Kokas, a professor at the University of Virginia, who studies media in China. Broadcasting live at the time, she says, was unprecedented.

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By the early aughts, as more TV stations went on the air in China, the NBA hatched deals with them, as well—19 others in all. The league adapted again as the Internet became popular in China, creating a Chinese-language NBA website that featured live game statistics in Simplified Chinese. In 2010, the NBA made a deal with Chinese media company Sina to stream games online.

During this time, the league also began expanding its marketing strategy to capitalize on Chinese stars. In 1999, the Dallas Mavericks drafted Wang Zhizhi. Then in 2002, Yao arrived. "It was a consumer phenomenon," says Jeffrey Towson, a professor at Peking University who specializes in investments in Asia. Chinese fans loved him—so much so that at the 2008 Beijing Summer Olympics, Yao carried the Chinese flag during the opening ceremony. “He literally became the flag bearer of Chinese sports," Towson says.

Yao retired in 2011, but the NBA has continued to iterate. It marketed Asian-American point guard Jeremy Lin to Chinese audiences as the next big superstar. It locked in deals with Chinese broadcasters. It created an official NBA Weibo account (China's version of Twitter), which now has 31 million followers. The NFL's Weibo account, by comparison has 440,000. This summer, the league plans to open a basketball theme park called Playzone in Shanghai.

Perhaps most importantly, the league didn't waste time connecting with Chinese fans where they were spending more and more of their time: on smartphones. Specifically, it cut a deal with Tencent—which, as Townson puts it, "is on every phone in China"—to stream NBA games.

Only One NBA

Even Stern may not have initially realized how fruitful his efforts in China would turn out to be. Today the country is not only the most populated in the world but also a rapidly growing economy with more than a billion entertainment-hungry consumers. So how did the NBA have the foresight to develop a strategy that has allowed it to succeed where so far Google, Facebook, and Netflix have all come up against roadblocks?

For one, the Chinese already loved basketball. Three hundred million people play basketball in China, according to the Chinese Basketball Association. The NBA has fed this potential fanbase locally as well by bringing preseason games, known as the NBA Global Games, to the country nearly every year since 2004.

While China has had its own national basketball league, the NBA is still the unparalleled powerhouse, both in athletics and marketing. Professional sports in China are also regulated by the government, which makes them less commercialized and professionalized, says Hanhan Xue, a sports management researcher at Florida State University.

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The NBA by contrast built up an enormous fan base in the country by capitalizing on its stars. Yao was a crucial part of this strategy, but the NBA has also sent other players to China to promote the sport. Kobe Bryant went to Hong Kong and Beijing way back in 2001, where he was interviewed on CCTV. LeBron James visited Beijing and Hong Kong in 2005 as an ambassador for Nike. And, for years, NBA players have participated in photo-ops at the Great Wall of China.

The league has also capitalized on the Chinese government’s push for a greater sports culture in the years leading up to the 2008 Summer Olympics in Beijing. The NBA has helped build basketball arenas in major cities and promoted basketball clinics and school programs. By helping foster basketball as a sport for kids in China, the NBA is continuing to reinforce the fanbase for professional sports.

Mass Market

For American media companies looking to gain clout in the country, the NBA serves as a kind of blueprint. That's especially important today as there's an enormous demand for media in China. And yet it won’t be as easy for companies like, say, Netflix, Facebook, or even NBCUniversal, to make a significant mark in China as the NBA has done.

For one, most media companies don’t have something no one else has that is also best served up live. Pirated films and TV shows are popular in China; why would users pay for something like Netflix or Hulu? But no one wants to watch the NBA Finals six months—or even a few days—after they happen.

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Meanwhile, US tech companies already face tremendous competition from giants like Tencent and Alibaba—that is, if the government allows them into the Chinese market at all. More recently, Chinese authorities have also starting cracking down more heavily on foreign media. So far, that protectionism has not extended to basketball.

Even if, say, Netflix started streaming in China, it would still face the challenge of adapting its content to meet the strictures of government censors. Live basketball doesn't really have that problem. Games are family-friendly fun in a way that Jessica Jones and House of Cards just aren't. “The NBA doesn’t have to make promises that they won’t go over any lines," Kokas says. "The game of basketball is such that unless something crazy happens it’s fine.”

Ultimately, basketball was already something that people in China knew and liked—the NBA just offered them the best version of the sport, with the stars, merch, and tech to boot. The NBA has something Chinese consumers want, and it figured out how to work within the system. It's a template other US companies would do well to emulate. Just one problem: none of those other companies have 7-foot giants pounding the boards—oh, or Steph Curry 3-pointers.

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